HAIDER INDUSTRIES VS FEDERATION OF PAKISTAN through Secretary, Law Division at Islamabad, 2016 PTD-LAHORE-HIGH-COURT-LAHORE 2004 (2016)

2016 P T D 2004

[Lahore High Court]

Before Shahid Karim, J

HAIDER INDUSTRIES through Managing Partner and others

Versus

FEDERATION OF PAKISTAN through Secretary, Law Division at Islamabad and others

Writ Petition No. 30425 of 2014, decided on 12/01/2016.

(a) Income Tax Ordinance (XLIX of 2001)----

----Ss. 53, 147, 148 & Second Sched., Part III, Cl. 72-B---SRO No. 717(I)/14 dated 7.8.2014---Exemptions and tax concessions in Cl. 72B Second Sched. of Income Tax Ordinance, 2001---Scope---Tax collected at import stage---Nature---Taxpayers were industrial undertakings within the meaning of S.2(29-C) of Income Tax Ordinance, 2001 and importing raw material for the purpose of self-consumption, regarding which advance tax was liable to be collected at import stage in terms of S. 148 of the Ordinance, and the tax thus collected was adjusted against the tax liability of the petitioners for that tax year while furnishing the return of total income under S. 168 of the Ordinance---Petitioners challenged Notification/SRO No. 717(I)/14 dated 7.8.2014 to the extent of conditions Nos. V and VIII thereof on the ground that said conditions were in the nature of restriction, as opposed to the purpose of Cl.72B of Second Sched. of the Ordinance---Validity---Clause 72B of Second Schedule of the Ordinance provided that a certificate would only be issued by the Commissioner if an application for the certificate was filed in the manner and conditions as specified by notification in the official gazette issued by the Board for the purpose of that clause---Words 'issued by the Board for the purpose of this clause' were pivotal, which had to be read in the context of the issuance of the notification by the Board---Notification, which had to be issued by the Board was circumscribed and hedged in by the purpose delineated and expressed by Cl. 72B, and the "said purpose" was that the provisions of S. 148 of the Ordinance would not apply to an industrial undertaking if the tax liability for the current tax year had been paid on the basis of determined tax liability higher than preceding two tax years---Said purpose was the corner stone of Cl. 72B of Second Sched. and the same could not be allowed to be defeated by an evasive device or a contraption---Board could not have travelled beyond the purpose enumerated in Cl. 72B---Purpose of Cl. 72-B was the grant of exemption from the operation of S. 148 of the Ordinance, and said purpose could not have been nullified or stunted by the insertion of conditions V and VIII of impugned Notification by the Board---Clauses V and VIII of the Notification/SRO were nothing but digression of the powers given in the Cl. 72B, proviso of Second Sched. of the Ordinance to suit the Board's fancy---Terms 'manner and conditions' used in proviso of Cl. 72B must be construed in the context of the purpose and the relief contemplated by the said clause---Clause 72B made the provisions of S. 148 of the Ordinance inapplicable to an industrial undertaking---Insertion of proviso to Cl. 72B of Second Schedule of the Ordinance was not tantamount to rendering the main enactment as redundant and the same was merely an exception about the application of a certain provision and its generality to certain cases---Purposive reading of the proviso to Cl. 72B, would show that the manner and conditions referred to in the proviso had a nexus to the formalities and form of the application to be filed and the proviso could not add to the conditions laid down in Cl. 72B---Conditions that were to be attached to any exemption were to be enacted by the Legislature under S. 53(1)(d) of the Ordinance and it was not within the powers of the Board to enact any such conditions; therefore, Conditions V and VIII of impugned Notification were void---High Court, declared Notification No.S.R.O. 717(I)/14 dated 7.8.2014 as ultra vires the powers of the Board and of no legal effect to the extent of Conditions V and VIII laid down therein---Said conditions were held not be read as part of the Notification---Principles.

Under section 53(1)(c) of Income Tax Ordinance, 2001, the income or class of income or person or class of persons specified in the Second Schedule of the Ordinance would be exempted from the operation of any provision of the Ordinance subject to any condition and to the extent specified therein. Petitioners had paid the tax liability for the current tax year (subject matter of present petitions) on the basis of the determined tax liability on the higher side of the preceding two tax years, and the petitioners claimed that they were entitled to an exemption from the applicability of the provisions of S. 148 of the Ordinance. Section 148 of the Ordinance mandated that the advance tax would be collected by the Collector of Customs from every importer of goods on the value of the goods at the rate specified in Part II of First Schedule of the Ordinance. Section 148 (7) provided that the tax required to be collected under section 148 of the Ordinance would be final tax on the income of the importer arising from the imports; however, the same was subject to section 148(1) of the Ordinance, under which section 148(7) of the Ordinance would not apply in the case of imports of certain goods mentioned in section 148(7). Petitioners were although industrial undertakings and had imported raw material etc., but under clause 72B of Second Schedule of the Ordinance, they would be caught by the mischief of section 148(7) of the Ordinance, which meant that the petitioners would be liable to pay the duty on import at the time of the imports and would file their final returns and seek a refund of the excess amount which would be found due to the petitioners.

Tax collected at the import stage was in the nature of advance tax and if the same was continued to be collected despite the payment of the higher of the immediately two preceding years tax liability, the same would inevitably result in the creation of refunds in favour of the tax payers for which they would have to go through a long drawn cumbersome process, which would in turn increase the cost of the capital of the petitioners. Seeking refund by the industrial undertakings was the nemesis of the industrial undertakings vis- -vis Federal Board of Revenue and the very purpose and intention underlying clause 72B of Second Schedule of the Ordinance was to unshackle the industrial undertakings from the vortex of seeking a refund.

Clause 72B of Second Schedule of the Ordinance provided that a certificate would only be issued by the Commissioner if an application for the said certificate was filed before the Commissioner in the manner and after fulfilling the conditions as specified by notification in the official gazette issued by the Board for the purpose of that clause. Words 'issued by the Board for the purpose of this clause' were pivotal, which had to be read in the context of the issuance of the notification by the Board. Notification, which had to be issued by the Board was circumscribed and hedged in by the purpose delineated and expressed by clause 72B, and the said purpose was that the provisions of section 148 of the Ordinance would not apply to an industrial undertaking if the tax liability for the current tax year had been paid on the basis of determined tax liability for the higher of the preceding two tax years. Said purpose was the corner stone of clause 72B and the same could not be allowed to be defeated by an evasive device or a contraption. Board could not have travelled beyond the purpose enumerated in clause 72B. Purpose of clause 72-B was the grant of exemption from the operation of section 148 of the Ordinance, and said purpose could not have been nullified or stunted by the insertion of Conditions V and VIII of impugned Notification by the Board in the Notification.

Clauses Nos.V and VIII of impugned Notification/SRO were nothing but digression of the powers given in the clause 72B, proviso of Second Schedule of the Ordinance to suit the Board's fancy. A proviso conditioned the principal matter that it qualified almost always the matter immediately preceding. Proviso to clause 72B must have been construed in the context of the general proposition regarding the true construction of the term 'proviso'.

T.S. Eliot, "Hamlet" (1919), in Selected Essays and Reading Law: The Interpretation of Legal Texts by Antonin Scalia and Bryan A. Garner rel.

Delegation must be in accordance with the statute. Purpose of clause 72B of Second Schedule of the Ordinance was grounded in practical considerations, and the intention was to rid the importers/ manufactures from the shackles of seeking a refund and in the process block their capital, which raised the question before the Court that whether said purpose could be whittled down and withdrawn through delegated powers, which ran counter to the main enactment of section 53 of the Ordinance.

De Smith's Judicial Review, Seventh Edition rel.

Presumption against ineffectiveness existed in the interpretation of all laws. A textually permissible interpretation that furthers rather obstructs the document's purpose should have been favoured. Interpretation always depended on context, the context always included effectiveness, and evident purpose always included effectiveness.

Reading Law: The Interpretation of Legal Texts by Antonin Scalia and Bryan A. Garner rel.

Cause 72B of Second Schedule of the Ordinance related to issuance of a certificate and the proviso related to that part of clause 72-B only. Holistic reading of the Conditions V and VIII of the impugned Notification would mean that the certificate would never be issued and effectively clause 72B would be rendered redundant. Laying down a condition did not include within it a condition to do away with the exemption. Terms 'manner and conditions' used in proviso of clause 72B must be construed in the context of the purpose and the relief contemplated by clause 72B. Respondents' contention, that the Conditions V and VIII had been designed to thwart any attempt on the part of the manufacturers to misuse the concession, could not be the basis of said conditions, as said purpose had to be expressed by the Legislature itself or delegated in clear terms, as the same could not have been assumed to have existed by the Board or culled out by its own subjective rules of deduction. Rest of the stipulations and terms comprising the 'manner and conditions' (apart from the Conditions V and VIII) were comprehensive enough to guard against any such attempt by the manufacturers.

Present case involved devolution, instead of delegation of, powers. Devolution (of powers) on the Board was based on the principle that was, in general, a Minister was not obliged to bring his own mind to bear upon a matter entrusted to him by a statute but he might act through a duly authorized officer. Manner and conditions for the issuance of a certificate could not have been prescribed by the Legislature in detail; thus, the same had been left to be determined by the Board by a latitude to the nature underlying the process.

Carltona Ltd. v. Commissioner of Works (1943) 2 All ER 560 and Customs and Excise Commissioner v. Cure and Deely Ltd. (1962) 1 Q.V 340 rel.

Clause 72B of Second Schedule of the Ordinance had its provinance in section 53 of the Ordinance. Legislature, in terms of section 53(1)(d) of the Ordinance, might have exempted from the operation of any provision of the Ordinance, any income or classes of income or persons of classes of persons specified in the Second Schedule. Clause 72B made the provisions of section 148 of the Ordinance inapplicable to an industrial undertaking. Clause 72B provided a condition to the effect that an industrial undertaking mast have paid the tax liability for any of the preceding two tax years, whichever was higher, and a certificate to that effect was to be issued by the concerned Commissioner; thus, clause 72B envisaged twin conditions to be fulfilled, and the proviso of clause 72B related to the latter condition. Condition as to issuance of the certificate was directly relatable to the payment of tax liability for the current year; said condition had been contemplated by section 53(1)(d) of the Ordinance, on basis of which exemption from the application of section 148 of the Ordinance would be granted. Sweep and scope of the proviso of clause 72B was wedded to the payment of tax liability, which was the basic notion. Proviso of clause 72B was merely concerned with the procedural formalities to be complied with, as the same introduced the process of filing of applications for obtaining a certificate which was the primary object of the proviso. Purposive reading of the proviso of clause 72B, therefore, would show that the manner and conditions referred to in the proviso had a nexus to the formalities and form of the application to be filed and the proviso could not add to the conditions laid down in clause 72B. Conditions that were to be attached to any exemption were to be enacted by the Legislature under section 53(1)(d) of the Ordinance and it was not within the powers of the Board to enact any such conditions; therefore, the Conditions V and VIII of impugned Notification were void.

Principle of promissory estoppel was applicable in the present case. [p. 2031] BB

Messrs Friendship Textile Mills and others v. Government of Balochistan and others 2004 SCMR 346 rel.

Insertion of a proviso to clause 72B of Second Schedule of the Ordinance could not be tantamount to rendering the main enactment as redundant and the same was merely an exception about the application of a certain provision and its generality to certain cases.

2011 SCMR 1560 and Hashwani Hotel Cases's 2007 SCMR 1131 = 2007 PTD 1473 rel.

Applying the principle of unjust enrichment to the present case, the Legislature, by clause 72B of Second Schedule of the Ordinance, had clearly intended to give a benefit to the petitioners and other persons in a similar situation. Federal Board of Revenue, by insertion of Conditions V and VIII in the Impugned Notification, had tried to unjustly enrich itself in clear violation of the mandate of clause 72B and its purpose. Unjust enrichment gave rise to restitutionary remedies. In any case where a claimant had paid tax which was not due, the restitutionary claim lied against the revenue authority that had received the payment. Petitioners, however, raised the ground of unjust enrichment in the general broad sense of the term without the context of restitution in mind, as the ground was more in the nature of ultra vires receipt of the tax, and the petitioners did not want to make the payment, made under a mistake of law, to be restituted at a later stage.

Messrs Pfizer Laboratories Ltd. v. Federation of Pakistan and others PLD 1998 SC 64; MCB Bank Ltd. v. Deputy Commissioner Inland Revenue and others 2015 PTD 911; The Principles of the Law of Restitution; The Law of Restitution, Andrew Burrows; Lipkin Gorman v. Karpuale Ltd. [1991] 2 AC 548 and Woolwich Equitable Building Society v. I.R.C [1993] A.C 70 rel.

High Court, therefore, declared the impugned Notification as ultra vires the powers of the Board and of no legal effect to the extent of Conditions V and VIII laid down therein, holding that the conditions would not be read as part of the Notification. Constitutional petition was allowed in circumstances.

(b) Income Tax Ordinance (XLIX of 2001)----

----S. 147----Advance tax paid by the taxpayer---Meaning, scope and purpose discussed.

Law and Practice of Income Tax by Huzaima Bukhari and Dr. Ikram ul Haq; Commissioner of Income Tax v. M/s. Habib Sugar Mills Ltd. 1993 PTD 343; Call Tell and another v. Federation of Pakistan and others 2005 PTD 833; Lone Cold Storage, Lahore v. Revenue Officers, Lahore Electric Power Co. and others 2010 PTD 2502; Messrs Riaz Bottlers (Pvt.) Ltd. v. LESCO (W.P. No.38 of 2010); Sui Northern Gas Pipelines v. Deputy Commissioner Inland Revenue and others 2014 PTD 1939 and Filters Pakistan (Private) Limited v. Federal Board of Revenue through Member Customs and 2 others 2010 PTD 2036 rel.

(c) Income Tax Ordinance (XLIX of 2001)----

----S. 53 & Second Sched.----Exemptions and tax concessions in the Second Schedule---Reduction of tax burden---Methods----Individual taxpayer reduce his tax burden either by way of tax evasion, which was a criminal offence, or tax avoidance, which did not involve unlawful conduct, or tax mitigation, whereby the taxpayer incurred expenditure which reduced his taxable income or his taxable assets or expenditure which the Parliament wished to encourage or reward by a tax allowance or deduction---Section 53 of the Ordinance deals with the exemptions and tax concessions to be given in the Second Schedule of the Ordinance and the same relates to the income or class of income or person or class of persons specified in that Schedule, that shall be exempted from tax under the Ordinance subject to any conditions and to the extent specified therein; said provision also deals with the income or class of income or persons or class of persons, who are subject to tax under the Ordinance at such rate as may be specified or who are allowed a reduction in tax liability under the Ordinance---Said provision also related to the exemption from the operation of any provision of the Ordinance subject to any conditions and to the extent specified therein---Federal Government, in terms of S. 53 (2) of the Ordinance, is empowered to make such amendment in the Second Schedule of the Ordinance by adding therein any clause or condition or making any change in any clause or condition.

Lord Templeman, Formerly a Lord of Appeal in Ordinary (UK), in his Article Tax and the Taxpayer Published in Volume 117 (2001) rel.

(d) Income Tax Ordinance (XLIX of 2001)----

----S. 148, Second Sched., Cl. 72B----Summary of historical background of the provisions.

(e) Interpretation of statutes----

----Taxing statute----Rules of interpretation---If a provision of a taxing statute can be reasonably interpreted in two ways, the interpretation, which is favourable to the assessee has to be accepted.

CIT v. Naga Hills Tea Co. Ltd. AIR 1973 SC 2524 and Kerala Financial Corporation v. CIT (1994) 4 SCC 375 rel.

(f) Interpretation of statutes----

----Taxing provisions/fiscal provisions---Rules of strict interpretation---Exemptions under a taxing statute must be strictly construed; however, said rule is not absolute in its application.

Sutherland on Statutory Construction (Third Edition vol. 3); Swadeshi Polytex Ltd. v. Collector of Central Excise (1990) 2 SCC 358; Interpretation of Taxing Statutes by Markandey Katju (Second Edition); Maxwell on the Interpretation of Statutes, twelfth edition, page 256 and Messrs Mehran Associates Limited v. The Commissioner of Income Tax, Karachi 1993 SCMR 274 rel.

(g) Interpretation of statutes----

----Proviso---Meaning, scope and purpose.

2011 SCMR 1560; Elahi Cotton Mill's case PLD 1997 SC 582; Hashwani Hotel Cases's 2007 SCMR 1131 = 2007 PTD 1473 T.S. Eliot, "Hamlet" (1919), in Selected Essays and Reading Law: The Interpretation of Legal Texts by Antonin Scalia and Bryan A. Garner rel.

(h) Interpretation of statutes----

----Presumption against ineffectiveness exists in the interpretation of all laws---Textually permissible interpretation that furthers rather obstructs the document's purpose should be favoured---Interpretation always depends on context, the context always includes effectiveness, and evident purpose always includes effectiveness.

Reading Law: The Interpretation of Legal Texts by Antonin Scalia and Bryan A. Garner rel.

(i) Delegation of powers----

----Scope and parameters.

De Smith's Judicial Review, Seventh Edition rel.

(j) Estoppel----

----'Promissory estoppel', principle of---Scope.

Messrs Friendship Textile Mills and others v. Government of Balochistan and others 2004 SCMR 346 rel.

Khurram Shehbaz Butt, Imtiaz Rashid Siddiqui Shaharyar Kasuri, Hashim Aslam Butt, Ch. Anwar ul Haq, Muhammad Ajmal Khan, Adnan Goraya, Hassan Kamran Bashir, Javed Iqbal Qazi, Shahid Pervaiz Jami, Mudassar Shuja ud Din, Rana Muhammad Afzal, Farhan Shahzad, Sh. Muhammad Akram, Muhammad Saad Khan, Ch. Muhammad Ali, Muhammad Mohsin Virk, Muhammad Humzah and Usman Ali Virk Mukhtar Awan for Petitioners.

Sarfraz Ahmad Cheema, Javed Athar, Liaqat Ali Chaudhry, Muhammad Asif Hashmi for Respondents.

Tahir Mahmood Ahmad Khokhar, Standing Counsel for Pakistan.

Date of hearing: 17th December, 2015.

JUDGMENT

SHAHID KARIM, J.---This petition under Article 199 of the Constitution of Islamic Republic of Pakistan, 1973, has the following prayer:--

i. "That condition No. V of Notification SRO No.717(I)/2014 dated 07th August, 2014 is illegal and has been issued by Respondent No.2 by traveling beyond the scope of powers contained in proviso to clause (72B) of Part-IV of Second Schedule to the Income Tax Ordinance, 2001.

ii.That condition No. V of Notification SRO No.717(I)/2014 dated 07th August, 2014 places restrictions and can by stretch be termed as "conditions".

iii.That condition No. V of Notification SRO No.717(I)/2014 dated 07th August, 2014 may graciously be declared illegal."

2.This judgment shall also decide the connected petitions, which raise an identical question of law and a list of which is attached with this judgment as Annexure 'A'. The primary challenge in these petitions are to conditions Nos.V and VIII, enumerated in SRO No.717(I)/14 dated 07.08.2014 (Notification). The said Notification has been issued in terms of proviso to clause 72B of the 2nd Schedule to the Income Tax Ordinance, 2001 (Ordinance, 2001).

3.For the purpose of decision of these petitions, it would suffice to refer to the basic facts with regard to the instant petition (W.P. 30425 of 2014):

"xi.That in the meanwhile, the Petitioner on the basis of the earlier Circular No.8 as amended (Annexure H) had applied for obtaining the exemption certificate vide letter No.JC/H-67/14/ 2495 dated 04th August, 2014. The Respondent No.3 issued exemption certificate dated 07th August, 2014 to the Petitioner on the basis of earlier circular of the Respondent No.2. Later the said exemption certificate was amended by Respondent No.3 on another application filed by the Petitioner on 22nd August, 2014.

(Copies of the applications and exemption certificates are Annexureures-K to K/3, respectively).

xii.The Petitioner after issuance of the notification (Annexure-J), re-applied for amendment of the earlier exemption certificate (Annexure -K/3) after fulfilling all the statutory requirements and conditions contained in the governing notification. The application was made vide letter No. JC/H67/14/2543 dated 12th September, 2014 which accompanied an application on the prescribed format provided through the notification (Annexure-J). The Respondent No.3 amended the certificate keeping into account the restriction placed by condition v. of the notification i.e. 110 percent of the quantity of raw material imported and consumed in the previous tax year.

(Copies of application and amended certificate are Annexures K/4 and K/5).

xiii.That the Petitioner during the Tax Year 2015 commencing from 01st day of July, 2014 has paid a huge sum of Rs.11,205,604/- till to date at import stage in terms of section 148 of the Ordinance for the reason of non-issuance of exemption certificate for the desired quantity of raw material to be imported which matches the production capacity of the Petitioner, despite the fact that the liability for obtaining the exemption certificate was only Rs. 1,280,053/-. "

A common thread which runs through these petitions is that the petitioners are industrial undertakings within the meaning of section 2(29c) of the Ordinance, 2001. The petitioners import raw material for the purposes of self consumption. Advance tax is liable to be collected at import stage in terms of section 148 of the Ordinance, 2001. The tax which is collected at the import stage is adjusted against the tax liability of the petitioners for that tax year determined by the taxpayer while furnishing the return of total income under section 168 of the Ordinance. The provisions which will have an impact on the decision of the instant petitions are section 53, section 148 and clause 72B of the 2nd Schedule to the Ordinance, 2001.

Rules Special to Taxing Laws:

4.It is settled by now that where a provision in a taxing statute can be reasonably interpreted in two ways, that interpretation which is favourable to the assessee has to be accepted. CIT v. Naga Hills Tea Co. Ltd. (AIR 1973 SC 2524). Also if two views are possible, the one favourable to the assessee has to be accepted. Sun Export Corporation v. Collector of Customs (1997) 6 SCC 564. It has also been established by respectable authority that circulars or instructions of the Board cannot override the Act. Kerala Financial Corporation v. CIT (1994) 4 SCC 375.

5.The rules regarding exemptions under taxing statute have also been established by precedents. One, exemptions under taxing statute must be strictly construed. The said rules have been brought out in Sutherland on Statutory Construction (Third Edition vol. 3) in the following words:-

"As a general rule grants of tax exemptions are given a rigid interpretation against the assertions of the taxpayer and in favour of the taxing power. The basis for the rule is the same as that supporting a rule of strict construction of positive revenue laws that the burdens of taxation should be distributed equally and fairly among the members of society."

6.This rule against exemptions, however, is not an absolute proposition. In Swadeshi Polytex Ltd. v. Collector of Central Excise (1990) 2 SCC 358, the Supreme Court of India observed as follows:--

"It is true that in a fiscal provision if benefit of exemption is to be considered this should be strictly construed. But the strictness of the construction of exemption notification does not mean that the full effect of the exemption notification should not be given by any circuitous process of interpretation."

7.The following observations from Interpretation of Taxing Statutes by Markandey Katju (Second Edition) would be relevant:

"An exemption clause should be interpreted to further the object of the provision. In Gujarat Industrial Corp v. CIT the assessee was a statutory body created for developing industries in Gujarat and to assist generally in the development thereof. Section 10(20A) of the Income Tax Act grants exemption to the income of "an authority constituted in India by or under any law enacted for the purpose of planning, development or improvement of cities, towns or villages'. The question was whether under this provision the assessee was entitled to exemption. It was held, development of an industrial area would have a direct impact on the development or improvement of that part of the city, town or village where such an area was located, and hence the exemption was available.

In Broach Dist Cooperative Cotton Sales Ginning and Processing Society Ltd v. CIT, Ahmedabad while interpreting the proviso to S.81(i)(c) of the Income Tax Act the question considered was whether for the purpose of claiming exemption, the process of ginning and processing could be taken as antecedent to the process of marketing of the cotton, in which case the income from those processes also could be exempt. The Supreme Court observed that the object of S 81(i) was to encourage and promote the growth of cooperative societies, and consequently a liberal construction must be given to the operation of that provision. The Court held that the entire activities of marketing, processing and ginning were to enjoy the exemption from income tax. Thus the Court adopted a liberal interpretation of the exemption."

8.A statement on the issue expressed in Maxwell on the Interpretation of Statutes, twelfth edition, page 256 has been oft-quoted with approval by the superior Courts: According to Maxwell:

"Statutes which impose pecuniary burdens are subject to the same rule of strict construction. It is a well-settled rule of law that all charges upon the subject must be imposed by clear and unambiguous language because in some degree they operate as penalties: the subject is not to be taxed unless the language of the statute clearly imposes the obligation, and language must not be strained in order to tax a transaction which, had the legislature thought of it, would have been covered by appropriate words. "In a taxing act", said Rowlett, J., "one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used". But this strictness of interpretation may not always enure to the subject's benefit, for "if the person sought to be taxed comes within the letter of the law he must be taxed, however great the hardship may appear to the judicial mind to be'.

As a general rule, and in accord with the prevailing view, revenue laws, and particularly tax laws, should be construed in favour of the taxpayer and against the Government. In fact, they are to be construed liberally in favour of the taxpayer and any substantial doubt resolved in favour of the citizen. Hence, any tax proceedings must be in strict accord with the provisions of the statures relating thereto."

9.In Messrs Mehran Associates Limited v. The Commissioner of Income Tax, Karachi (1993 SCMR 274), the Supreme Court of Pakistan laid down the basic rule as follows:

"The cardinal principles of interpretation of a fiscal statute seem to be that all charges upon the subject are to be imposed by clear and unambiguous language. There is no room for any intendment nor there is any equity or presumption as to tax. A fiscal provision of a statute is to be construed liberally in favour of the tax-payer and in case of any substantial doubt the same is to be resolved in favour of the citizen."

Advance Tax:

10.The concept and nature of advance tax paid by the taxpayer and contemplated inter alia under section 147 of the Ordinance, 2001, has been considered in the judgments of our superior courts. In these judgments, the precise purpose for the enactment of advance tax and its raison d'etre has been brought forth. These judgments shed light on the concept underlying advance tax and clears the cobwebs surrounding the whole concept. Firstly, a few observations regarding the nature of advance tax contained in the "Law and Practice of Income Tax" by Huzaima Bukhari and Dr. Ikram ul Haq, would be pertinent. They are reproduced as under:

"Over the period of time, this section has been used to meet day to day cash requirements of the government of Pakistan. Payment of tax utilized in advance, before its adjustment at the time of filing returns, causes heavy cost to the payers as they could employ this amount in their business capital to earn profits..."

Parallel to section 53 of the RO, the basis of payment of advance tax remained the same i.e. on quarterly basis, except in the case of banks from 1st January, 2008. the FBR kept on changing the calculation from turnover to income and now back to turnover. Prior to 1.7.2004, it was on the basis of tax to turnover ratio which was to be applied to each quarter's turnover for which advance tax was due in the case of taxpayers other than individuals. Then through an amendment vide Finance Act, 2004, the concept of estimated income was reintroduced but not for long as in the case of companies, Finance Act, 2009 has reverted back to advance tax on the basis of turnover for the quarter."

The liability to pay advance tax on tax-to-turnover ratio has been reverted to declared/ assessed/ estimated income basis by Finance Act, 2004. It took seven years for the CBR to realize that what it was collecting in the name of advance tax was in fact debt owed to taxpayers. This amendment had prevented overpayment in the name of advance tax and there were fewer refunds at the time of filing of returns. The amendment vide Finance Act, 2004 restored the pre-1997 position when advance tax was paid on the basis of last declared/assessed income with the right to give estimate of income."

11. In Commissioner of Income Tax v. M/s. Habib Sugar Mills Ltd. (1993 PTD 343), the Supreme Court of Pakistan had the occasion to dilate upon the concept of advance tax in the course of interpretation of section 18-A of the Income Tax Act, 1922, which was a predecessor of the provisions regarding advance tax in Ordinance, 2001. The concept was elaborated upon in the following words:

"...These provisions show that the payment being made under section 18-A is a payment made merely on account, to be adjusted against the charge of income tax as finally ascertained and determined on completion of the regular assessment by the I.T.O. for the relevant assessment year. This is manifest from the circumstance that simple interest at the rate of 4% per annum is to be paid by the Central Government on the amount paid under section 18-A from the date of the payment to 30th June of the financial year in which the amount was paid. This fact indicates that the amount payable under section 18-A is not a tax but merely a pre -payment of an amount towards the tax due. The said amount does not become the property of the Central Government but remains vested in the assessee company. Undoubtedly, it is an amount which must be paid in advance, in respect of tax, before it becomes due. But it (the tax) becomes due only after regular assessment and if on regular assessment nothing or a lesser amount is found due and payable; the Government, in that event, shall have to return the amount paid or the sum paid in excess with interest from the date of payment to the date of such assessment. Accordingly, in our opinion the amount paid under section 18-A is not a payment of the "income tax" in advance but merely the credit of an amount with the Central Government, which can be utilized and adjusted to the extent necessary towards the ultimate liability of income tax found due after it has been determined..."

It will be noted that the payment under section 53 of the present law expressly stated to be by way of "advance tax". This change made in law, which has replaced the earlier law (namely the Income Tax Act of 1922) confirms our opinion that the payment required to be made under section 18-A of the said Act to the Central Government was a payment on account towards the payment of a tax which is determined after regular assessment to be payable in the future assessment year."

12.In a nub, the Supreme Court of Pakistan concluded that advance tax was an amount which must be paid in advance, in respect of tax, before it becomes due and the tax becomes due only after regular assessment and the determination of the ultimate tax found due.

13.In Call Tell and another v. Federation of Pakistan and others (2005 PTD 833) a challenge was led to section 236 of the Ordinance, 2001 which provision envisages the collection of advance tax and the refund of advance tax already collected. The challenge was repelled by the Sindh High Court in the following words:

"7. First of all, we would like to point out that the collection/ deduction of advance tax is not a new concept introduced by the Income Tax Ordinance, 2001. The concept was introduced for first time in the Indian subcontinent in the year, 1944 and since then it has continuously occupied the field in the realm of Income Tax... "

8. In fact the collection of advance tax does not amount to levy of tax as alleged by the learned counsel for the petitioners. The Hon'ble Supreme Court of Pakistan has held in the case of CIT v. Asbestos Cement Industries Ltd. 1993 PTD 343, that the advance tax is a payment made merely on account to be adjusted against the charge of income tax as finally ascertained. It is not a tax but merely a provisional payment of an amount towards tax due. The said amount does not become the property of the Central Government but remains vested in the assessee.

9. Thus the deduction/collection of advance tax does not amount to levy of tax, except in the cases falling under the presumptive tax regime where the deduction/collection of tax amounts to final payment of tax and no refund is made..."

14.Once again, the concept of advance tax has been elaborated upon and while doing so reliance on the judgment of the Supreme Court of Pakistan was also made. It was conclude that advance tax was a payment made merely on account to be adjusted against the charge of income tax as finally ascertained. It is merely a provisional payment of an amount towards tax due. A further enunciation of the concept can be found in two judgments of this Court which shall be referred to hereinbelow.

The Law:

15.We may begin the discussion by reference to the observations made by Lord Templeman, Formerly a Lord of Appeal in Ordinary (UK), in his Article "Tax and the Taxpayer' published in volume 117 (2001) of the Law Quarterly Review. The Law Lord had this to say with regard to reduction of burden of tax:

"Taxes are universally unpopular though they have been described as the price we pay for civilization. There are three methods by which an individual taxpayer may seek to reduce his burden of tax. The first method is tax evasion and is a criminal offence. The taxpayer conceals or fraudulently misrepresents to the Revenue the incidence and ambit of his tax affairs..."

"The second method is tax avoidance, which does not involve unlawful conduct. The taxpayer's advisers invent a scheme whereby he can hope to enjoy the benefit of a taxable event without becoming liable to pay the tax. A tax avoidance scheme includes one or more interlinked steps which have no commercial purpose except for the avoidance of tax otherwise payable, and can conveniently be described as artificial steps.

"The third method is tax mitigation whereby a taxpayer incurs expenditure which reduces his taxable income or his taxable assets or whereby a taxpayer incurs expenditure which Parliament wishes to encourage or reward by a tax allowance or deduction. Tax mitigation may take a variety of forms but is distinguishable from tax avoidance; tax mitigation does not include any artificial step though the motive which inspires a taxpayer may be mainly or wholly the desire to reduce tax. A taxpayer may consider that premium bonds are a bad investment or that an ISA has a poor chance of increasing in value or that his children do not deserve his bounty. Nevertheless if he makes an investment or divests himself of property and otherwise fulfils the requirement of the legislation, then even though he may do so to reduce his tax, his motive is irrelevant."

16. The 2nd Schedule which relates to exemption from specific provisions has its provenance in section 53 of the Ordinance, 2001. Section 53 in turn deals with the exemptions and tax concessions to be given in the 2nd Schedule and relates to the income or class of income or persons or class of persons specified in that Schedule who shall be exempted from tax under the Ordinance subject to any conditions and to the extent specified therein. Moreover, the said provision deals with the income or class of income or persons or class of persons who are subject to tax under the Ordinance at such rate as may be specified or are allowed a reduction in tax liability under the Ordinance, 2001. It also relates to the exemption from the operation of any provision of the Ordinance, 2001 subject to any conditions and to the extent specified therein. By subsection (2) of section 53, the Federal Government has been given the power to make such amendment in the 2nd Schedule by adding any clause or condition or making any change in any clause or condition therein.

17.It is common ground between the parties that clause 72B was inserted by Finance Act, 2013. Clause 72B reads as under:--

"(72B) The provisions of section 148 shall not apply to an industrial undertaking if the tax liability for the current tax year, on the basis of determined tax liability for any of the preceding two tax years, whichever is the higher, has been paid and a certificate to this effect is issued by the concerned Commissioner."

18.By Finance Act, 2014, a proviso was added which is to the following effect:--

"Provided that the certificate shall only be issued by the Commissioner if an application for the said certificate is filed before the Commissioner, in the manner and after fulfilling the conditions as specified by notification in the official Gazette, issued by the Board for the purpose of this clause."

19.Section 148 to the extent of its relevance to the instant petitions reads as under:--

"148. Imports.-(1) The Collector of Customs shall collect advance tax from every importer of goods on the value of the goods at the rate specified in Part II of the First Schedule.

.

.

.

(7) The tax required to be collected under this section shall be a final tax except as provided under subsection (8) on the income of the importer arising from the imports subject to subsection (1) and this subsection shall not apply in the case of import of--

(a)raw material, plant, machinery, equipment and parts by an industrial undertaking for its own use;

(b)fertilizer by manufacturer of fertilizer; and (c) motor vehicles] in CBU condition by manufacturer of motor vehicles.

(d)large import houses, who,-

(i) have paid-up capital of exceeding Rs. 250 million;

(ii) have imports exceeding Rs.500 million during the tax year;

(iii) own total assets exceeding Rs.350 million at the close of the tax year:

(iv) is single object company;

(v) maintain computerized records of imports and sale of goods;

(vi) maintain a system for issuance of 100% cash receipts on sales;

(vii) present accounts for tax audit every year;

(viii) is registered under the Sales Tax Act, 1990 and

(ix) make sales of industrial raw material of manufacturer registered under the Sales Tax Act, 1990; and

(e)a foreign produced film imported for the purposes of screening and viewing."

The Submissions:

20. A historical background of these provisions can be summarized as follows:

I.Subsections (3) and (4) of section 148 of the Ordinance, 2001 formed part of the said provision originally. These subsections were deleted vide Finance Act, 2007. By these provisions, the power was originally vested with the Commissioner to allow a reduction of the rate of advance tax collectible at import stage. Moreover, the power was conferred on the Commissioner to issue an exemption certificate to the manufacturer importing raw material for self use on the payment of advance tax under section 147 of the Ordinance, 2001 for the period beginning from the date of issuance till the close of a financial year. With a further power under the proviso to cancel the exemption certificate if the manufacturer failed to pay an installment of the advance tax.

II.The deletion of these provisions set into motion a spate of litigation which culminated in the judgment of this Court in Lone Cold Storage, Lahore v. Revenue Officers LESCO and others (2010 PTD 2502). In the wake of this judgment, a number of Notifications were issued by the Federal Board of Revenue (FBR) including SRO No. 1053(I)/2010 dated 22.11.2010 and SRO No.947(I)/2008 dated 05.09.2008.

III.As stated above, by Finance Act, 2013 clause 72B was inserted in Part IV of 2nd Schedule to the Ordinance, 2001.

21.As adumbrated, the primary challenge in these petitions is to conditions V and VIII given in the Notification.

22.The argument on behalf of the petitioners were led by Mr. Khurram Shehbaz Butt Advocate and Mr. Shahryar Kasuri, Advocate. The learned counsels for the petitioners contended that the conditions inserted by way of clauses V and VIII are in the nature of a restriction which cannot be done in the purported exercise of powers under the proviso to clause 72B. In a nub, according to the learned counsel for the petitioners, the Board has traveled beyond the scope of the powers given to it under the proviso and thus offends the settled principle with regard to the interpretation of proviso. Secondly, the learned counsel contended that the Board was merely exercising a delegated power in terms of proviso and by the insertion of the conditions V and VIII, the right conferred by clause 72B has for all practical purposes been taken away. Thirdly, according to the learned counsel, the conditions offend the doctrine of promissory estoppel as clause 72B was in the nature of a promise by the legislature and that promise has been breached by the insertion of the conditions contained in the Notification. The stance of the learned counsel for the petitioners was that the imposition of the conditions would be tantamount to unjust enrichment of the State at the altar of the petitioners and impinges upon the fundamental rights enshrined in Articles 4, 18, 23 and 24 of the Constitution of Islamic Republic of Pakistan, 1973 (Constitution).

23.Mr. Sarfraz Ahmad Cheema, Advocate appearing on behalf of the respondents Nos.2 to 5 has made written submission which are as follows:--

"1.That the petitioner has challenged the vires of SRO 717(I)/2014 dated 07.08.2014 being issued by the respondent under the scope and power contained in proviso to Clause 72B of Part IV of Second Schedule of Income Tax Ordinance, 2001 ("Ordinance"). The petitioner has further prayed that since condition No. V has placed restriction, therefore the same may be declared illegal.

2.That the argument of the learned counsel for the petitioners is that Clause 72B of Part-IV to Second Schedule Grants waiver to pay income tax at imports stage is misconceived. It is apparent from the heading of Second Schedule that it deals with EXEMPTIONS AND TAX CONCESSION and not any waiver. Through Clause 72B concession/exemption has been granted to the tax payer but subject to certain conditions to avoid the misuse of concession.

3.In this regard it is submitted that as per section 148(1) of Ordinance, "The Collector of Custom shall collect advance tax from every importer of goods on value of the goods at the rate specified in Part II of the First Schedule".

Therefore, under the provisions of this subsection every importer is required to pay withholding tax at the time of imports as provided in the Ordinance.

4.That under the provision of Section 148(7) of the Ordinance tax paid at import stage is final under which no adjustment is available. However, cases covered under Clauses a to c of Sub-section (7), tax paid at Import stage is adjustable at the time of filing the return. The petitioner has been granted concession not to pay income tax at import stage subject to fulfillment of conditions mentioned in SRO 717(I)/2014 dated 07.08.2014. This is the special kind of concession/exemption from withholding tax which may lead to a disparity. Those persons who are not required to pay withholding tax at the time of import may import the goods or material more than required for their industrial needs and can supply it in the market which could adversely effect the business of those importers who are paying tax at import stage and the tax deducted at import stage is Final Discharge of tax liability in their cases.

5.That in order to safeguard the interest of Revenue and importer-cum-supplier and to prevent misuse of this facility of concession not to pay tax at import stage and to regulate activities of manufactures, the proviso to Clause 72B of Part 4 of 2nd Schedule has been added which requires the taxpayer to fulfill certain conditions to avail the benefit of exemption from withholding tax at import stage.

6.The SRO 717(I)/2014 dated 07.08.2014 has been issued by the Revenue Division Government of Pakistan under the powers conferred by proviso of clause 72B of Part IV of 2nd Schedule which provides the procedure to claim exemption. Sub-clause V of Clause -A of SRO 717(I)/2014 allows the taxpayer to import 110% of the quantity of raw material imported and consumed in the previous tax years, after paying the tax liability for the current year on the basis of determined tax liability for any preceding 2 years whichever is higher. It means that the tax payer can import 10% more raw material as compare to last year by paying the same amount of tax liability. However, if the import exceeds 110% of the last year's import then the tax will be withheld under section 148(1) which would be adjustable at time of filing of return.

7.It is clear from above submissions that SRO 717(I)/2014 has been issued to safeguard the revenue and the rights of importer-cum-supplier to avoid discrimination. It is settled law that the object and purpose of legislature by inserting a proviso with a section/Subsection is to provide an exemption, and to control or bar the application of main section/subsection in certain cases. Thus, natural presumption of providing such proviso is to exclude the General application of the relevant section/sub-section in the matter notified under the proviso. Reliance is placed on (2011 SCMR 1560) relevant head note (B) Page 1578.

8.That the proviso added to Clause 72B Part-IV of 2nd Schedule and SRO 717(I)/2014 issued under these provisions is for the purpose to safeguard the revenue and the rights of importer-cum-supplier in the larger interest of public exchequer. The proviso as well as Statutory Notification has been issued while keeping in mind, social setting of the country, and burning problems of the prevalent time. It is settled law by Honourable Apex Court in ELAHI COTTON MILLS (PLD 1997 SC 582) Para No. 31 (ii), vii, viii

9.That if the taxpayer intends to avail this concession he has to follow the prescribed procedure. It is also an established principal of lawthat any provision granted exemption/ concession has to be interpreted strictly.(Hashwani Hotel Case cited at 2007 SCMR 1131 = 2007 PTD 1473 relevant para 11."

The Scheme:

24.As a first step and before a determination is made with regard to the issues raised in these petitions, and as a prefatory, the nature and scheme which permeates the various provisions which are the subject matter of these petitions and which would be engaged during the course of the determination must be understood. As brought forth above, section 53 relates to exemptions and tax concessions enumerated in the 2nd Schedule. We are here concerned with the clause 'd' of subsection (1) of section 53 by which the income or class of income or persons or class of persons specified in the 2nd Schedule shall be exempted from the operation of any provision of the Ordinance subject to any condition and to the extent specified therein. There is no dispute between the parties that clause 72B was inserted by Finance Act, 2013 and a proviso was also brought in vide Finance Act, 2014. It is also a common ground that by clause 72B the provisions of section 148 shall not apply to an industrial undertaking if the tax liability for the current tax year on the basis of determined tax liability for any of the preceding two tax years, whichever is the higher has been paid and a certificate to this effect is issued by the Commissioner. The learned counsel for the parties agree that the petitioners have paid the tax liability for the current tax year (subject matter of these petitions) on the basis of the determined tax liability on the higher of the preceding two tax years. The petitioners crave that they are now entitled to an exemption from the applicability of the provisions of section 148 of the Ordinance, 2001. To recapitulate, section 148 mandates that the advance tax shall be collected by the Collector of Customs from every importer of goods on the value of the goods at the rate specified in Part II of the 1st Schedule. By subsection (7), the tax required to be collected under section 148 shall be a final tax on the income of the importer arising from the imports. However, this is subject to subsection (1) as also that subsection (7) shall not apply in the case of imports of certain goods mentioned in subsection (7). Admittedly, the petitioners are industrial undertakings and they import raw material etc. and but for clause 72B, they would be caught by the mischief of subsection (7) of section 148. This would mean that the petitioners would be liable to pay the duty on import at the time of the imports and would file their final returns and seek a refund of the excess amount which will be found due to the petitioners.

25.According to the learned counsel for the petitioners, the tax has been paid in terms of clause 72B and due to the imposition of the conditions, the petitioners are being compelled to pay the duty on import at the time of the imports which has circumvented and nullified the impact of the benefit handed out in clause 72B. According to them, the exemption is merely from a specific provision and not from the tax. What is contemplated by clause 72B is a waiver from the advance regime or from the advance withholding regime and no more.

26.The entire basis of these petitions and the grievance urged therein revolves around the confiscatory nature of the conditions V and VIII given in the Notification. We must bear in mind that the tax collected at the import stage is in the nature of advance tax and if the same is continued to be collected despite the payment of the higher of the immediately two preceding years tax liability, it will inevitably result in the creation of refunds in favour of the petitioners for which the petitioners will have to go through a long drawn and cumbersome process which would in turn increase the cost of capital of the petitioners. It is common knowledge that seeking a refund by the industrial undertakings is the nemesis of the industrial undertakings vis- -vis FBR and the very purpose and intention underlying clause 72B seems to be to unshackle the industrial undertakings from the vortex of seeking a refund.

27.With regard to the condition No.VIII, the argument seems to be that the clause requires the person to have a taxable income which condition runs counter to the provisions of clause 72B which refers to the determined tax liability as opposed to taxable income. According to the learned counsel for the petitioners, taxable income is defined in section 2(64) read with section 9 of the Ordinance, 2001 which means persons having a positive income not below zero. Once again, by insertion of the condition regarding taxable income, the purpose and effect of clause 72B is being stunted.

Determination:

28.As explicated above, we are here concerned with the true construction of the proviso to clause 72B of the 2nd Schedule to the Ordinance, 2001. The said proviso was inserted by Finance Act, 2014 which provides that a certificate shall only be issued by the Commissioner if an application for the said certificate is filed before the Commissioner in the manner and after fulfilling the conditions as specified by Notification in the official gazette, issued by the Board for the purpose of this clause. In my opinion, the pivotal words are "issued by the Board for the purpose of this clause". These words have to be read in the context of the issuance of the Notification by the Board. Therefore, the Notification which has to be issued by the Board is circumscribed and hedged in by the purpose delineated and expressed by clause 72B. That purpose, to my mind, clearly is that the provisions of section 148 shall not apply to an industrial undertaking if the tax liability for the current tax year has been paid on the basis of determined tax liability for the higher of the preceding two tax years. That purpose is the corner stone of clause 72B and cannot be allowed to be defeated by an evasive device or a contraption. Certainly, the Board cannot travel beyond the purpose enumerated in clause 72B. I am in no manner of doubt that the purpose of clause 72B is the grant of exemption from the operation of section 148. That purpose cannot be nullified or stunted by the insertion of condition by the Board in the said Notification.

Proviso:

29.What is at the heart of these petitions is the true construction of the proviso of clause 72B. By the enactment of the conditions V and VIII, the Board has fallen into the same mistake to which T.S. Eliot warned about literary critics who forgot that they are dealing with a text and instead find in a work such as Hamlet "a vicarious existence for their own artistic realization." They substitute their own Hamlet for Shakespeare. (T.S. Eliot, "Hamlet" (1919), in Selected Essays). The clauses V and VIII are nothing but digression of the powers given in the proviso to suit the Board's fancy. As regards the true intention of the effect of a proviso, it has been said in Reading Law: The Interpretation of Legal Texts by Antonin Scalia and Bryan A. Garner that a proviso conditions the principal matter that it qualifies-almost always the matter immediately preceding.

"Properly speaking, a proviso is a clause that introduces a condition by the word provide. A provision "is introduced to indicate the effect of certain things which are within the statute but accompanied with the peculiar conditions embraced within the proviso. It modifies the immediately preceding language.

Because of regular abuse of provisions, however, the rule that a proviso introduces a condition has become a feeble presumption. One now often finds provided that introducing not a condition to an authorization or imposition, but an exception to it, or indeed even an addition to it. And the authorization or imposition that it modifies is often found not immediately before but several clauses earlier. Because of the variable meaning and variable reach of provisos, they have come to be disfavored by knowledgeable drafters."

30.The proviso to clause 72B must, therefore, be construed in the context of the general proposition regarding the true construction of the term "proviso" as set forth above.

Delegation:

31.The learned counsel for the petitioners attacked the clauses V and VIII on the ground of excessive delegation as well. According to the learned counsel, the Board has traveled beyond the delegation conferred upon it to prescribe the manner and conditions and has by imposing the conditions impugned herein, exceeded the delegated authority. The rule against delegation has been brought forth in the treaties De Smith's Judicial Review, Seventh Edition in the following words:

"A discretionary power must, in general, be exercised only by the public authority to which it has been committed. It is a well-known principle of law that when a power has been conferred to a person in circumstances indicating that trust is being placed in his individual judgment and discretion, he must exercise that power personally unless he has been expressly empowered to delegate it to another. This principle has been applied in the law of agency, trusts and arbitration as well as in public law. The former assumption that the principle applies only to the sub-delegation of delegated legislative powers and to the sub-delegation of other powers delegated by a superior administrative authority, is unfounded. It applies to the delegation of all classes of powers, and it was indeed originally invoked in the context of delegation of judicial powers. It is the strict sense and to view the problem as a whole."

32. Some of the principles elicited from the cases in which delegation discretion has been considered are, vesting authority without supervisory control, degree of control maintained may be material, amplitude, impact and importance of the adumbrated powers, further sub-delegation and exercise of deliberate judgments. Most important of these is that the delegation must be in accordance with the statute. There is a rule against delegation of wide powers and it has generally been viewed improper to do so. The following observations from De Smith's Judicial Review would illustrate the point:

"It is improper for an authority to delegate wide discretionary powers to another authority over which it is incapable of exercising direct control, unless it is expressly empowered so to delegate. Thus, the Minister of Works could not allocate to the Minister of Health part of his functions in the system of building licensing. A Canadian provincial marketing board, exercising delegated authority, could not sub-delegate part of it regulatory powers to an inter-provincial authority. nor could a local authority, empowered to issue cinematograph licenses subject to conditions, attach a condition that no film shall be shown which had not been certified for public exhibition by the British Board of Film Censors, unless the authority has expressly reserved to itself power to dispense with that requirement in any individual case. It is doubtful how far a function upon local authorities and their officers, over whom he is constitutionally enabled to exercise indirect control. One may surmise that the courts would not readily uphold the validity of a devolution of very wide discretionary powers, but that if the devolution of discretion covered a relatively narrow field they might characterize the relationship as agency rather than delegation and hold that it had been validly created."

33.The purpose of clause 72B is grounded in practical considerations. The intention was to rid the importers/ manufacturers from the shackles of seeking a refund and in the process block their capital. This begs the question whether the purpose can be whittled down and withdrawn through delegated powers which run counter to the main enactment of section 53.

Clause 72B

34.To begin with, in the interpretation of all laws, there is a presumption against ineffectiveness. "A textually permissible interpretation that furthers rather than obstructs the document's purpose should be favored". "This follows inevitably from the facts that (i) interpretation always depends on context; (ii) context always includes evident purpose; (iii) evident purpose always includes effectiveness". (Reading Law: The Interpretation of Legal Texts by Antonin Scalia and Bryan A. Garner).

35.Upon a reading of clause 72B, it is evident that it relates to issuance of a certificate and the proviso relates to that part of clause 72B only. A holistic reading of conditions V and VIII would mean that that certificate will never be issued and effectively clause 72B will be rendered redundant. It may be emphasized that the laying of a condition does not include within it a condition to do away with the exemption. Therefore, the terms "manner and conditions" used in the proviso must be construed in the context of the purpose and the relief contemplated by clause 72B. Had it been the intention of the legislature to impose the conditions V and VIII, the legislature could easily have been done away with clause 72B or amended it suitably. One of the main planks of the arguments by the counsel for the respondents justifying the insertion of the conditions was that they were designed to thwart any attempt on the part of the manufacturers to misuse the concession. This, in my opinion, can hardly form a basis for these conditions. If this was the underlying purpose then it ought to have been expressed by the legislature itself or delegated in clear terms. It could not be assumed to exist by the FBR or culled out by its own subjective rules of deduction, from a reading of the proviso when we go through the contents of the Notification, it becomes evident that the rest of the stipulations and terms comprising the "manner and conditions" (apart from the conditions V and VIII) are comprehensive enough to guard against any such attempt by the manufacturers.

36.In my opinion, this is merely a case of powers being devolved on the Board rather than a delegation of powers. This is based on the theory that "public business could not be carried on if that were not the case": Carltona Ltd. v. Commissioner of Works (1943) 2 All ER 560 (Landmark M.R). Also the devolution on the Board was based on the principle that "in general, therefore, a Minister is not obliged to bring his own mind to bear upon a matter entrusted to him by statute but may act through a duly authorized officer". Customs and Excise Commissioner v. Cure and Deely Ltd. (1962) 1 Q.V 340. Certainly, the manner and conditions for the issuance of a certificate could not have been prescribed by the legislature in detail and thus it was left to be determined by the Board by a latitude to the nature underlying the process.

37.To reiterate, clause 72B has its provenance in section 53. For our purposes, clause (d) of subsection (1) would be attracted. By a cumulative reading of section 53(1)(d), the legislature may exempt from the operation of any provision of the Ordinance, any income or classes of income or persons or classes of persons specified in second schedule. This has been made subject to any conditions. Clause 72B makes the provisions of section 148 inapplicable to an industrial undertaking. A condition is, therefore, spelt out in the said clause to the effect that that industrial undertaking must have paid the tax liability for the current tax year on the basis of determined tax liability for any of the preceding two tax years, whichever is the higher. Further, that a certificate to this effect is issued by the concerned Commissioner. This clause, thus, envisages twin conditions to be fulfilled. The proviso relates to the latter condition. Thus, the condition as regards the issuance of the certificate is directly relatable to the payment of tax liability for the current year. That is the condition properly contemplated by section 53(1)(d) and on the basis of which exemption from the application of section 148 shall be granted. The sweep and scope of the proviso is wedded to the payment of tax liability, which is the basic notion. The proviso merely concerns with the procedural formalities to be complied. We must bear in mind that the proviso introduced the process of filing of applications for obtaining a certificate which was the primary object of the proviso. Therefore, a purposive reading of the proviso would show that the manner and conditions referred to in the proviso have a nexus to the formalities and form of the application to be filed and cannot add to the conditions laid down in clause 72B. Intrinsically, lest it be forgotten or lost sight of, the conditions that are to be attached to any exemption are to be enacted by the legislature under section 53(1)(d) and is not within the powers of the Board to enact and any such condition is void and non est.

38.A cluster of case law was produced by both the learned counsel for the parties. On behalf of the petitioner, reliance was placed on Lone Cold Storage, Lahore v. Revenue Officers, Lahore Electric Power Co. and others (2010 PTD 2502) in which the true nature and concept of advance tax has been discussed. Reliance in this judgment was placed on another judgment of Messrs Riaz Bottlers (Pvt.) Ltd. v. LESCO (W.P. No.38 of 2010) for the elaboration of the term "advance tax" and its connotation. It was concluded as under:

"28. Advance Tax is, therefore, an estimated amount of proposed income tax to be paid by the taxpayer at the close of the Tax Year. After the said estimation the law requires the taxpayer to pay the said estimated amount during the currency of the Tax Year in four quarters. The estimate is to be made by the taxpayer and is not for the tax authorities to question or object till the close of the Tax Year when the law authorizes the tax authorities to verify the advance tax paid and impose additional tax if the advance paid has been less than 90% of the total income tax liability of the taxpayer (section 205 of the Ordinance)."

39.The concept of advance tax was reiterated in Sui Northern Gas Pipelines v. Deputy Commissioner Inland Revenue and others (2014 PTD 1939), a judgment of a single Bench of this Court. The learned counsel for the petitioners next relied upon Filters Pakistan (Private) Limited v. Federal Board of Revenue through Member Customs and 2 others (2010 PTD 2036) with regard to the general rules of interpretation of taxing statutes. Messrs Friendship Textile Mills and others v. Government of Balochistan and others (2004 SCMR 346) was cited for the proposition for promissory estoppel and the following observations at page 350 of the judgment are pertinent:

"...The question arises whether in such a situation, the principle of promissory estoppel as laid down in the cases of Collector of Central Excise and Land Customs and 3 others v. Azizuddin Industries Ltd., Chittagong PLD 1970 SC 439 and Al-Samrez Enterprise v. The Federation of Pakistan 1986 SCMR 1917 was applicable. The answer is in the affirmative. In Al-Samrez case (supra), a similar notification was issued in exercise of administrative power conferred under the Customs Act through which a concession was granted as regards custom and other Government dues for a fixed period. It was sought to be withdrawn in exercise of similar power but this Court rules that once a concession or benefit had been granted for a period which had taken effect, it could not be withdrawn by virtue of section 21 of the General Clauses Act unless the Statute itself had conferred such a power on the Executive Authority. The Federal Government subsequently amended the Customs Act and added section 31-A empowering the Federal Government to withdraw such a concession at any time even during the currency of the period for which the same was earlier granted. In the present case, there is nothing in the Balochistan Local Government Ordinance or the Balochistan Local Council (Imposition of Taxes) Rules empowering the Provincial Government to withdraw the concession already made through Notification dated 2-8-1995 for a fixed period of five years for charging of octroi at the rate of Rs.11 per bale, therefore, the principle of promissory estoppel laid down in the reported judgments referred above was applicable with full force to the present cases."

40.Mr. Sarfraz Ahmad Cheema, Advocate on behalf of the respondents in some of the petitions relied upon Hashwani Hotels Limited v. Government of Pakistan and others 2007 SCMR 1131 = 2007 PTD 1473 to drive home his argument that an exemption is to be given a rigid interpretation and is to be strictly construed. He further cited Dr. Muhammad Anwar Kurd and 2 others v. The State through Regional Accountability Bureau, Quetta (2011 SCMR 1560) for the true nature and ambit of a proviso used in an enactment. This judgment of the Supreme Court of Pakistan discusses and dilates upon the nature of proviso inserted to the main enactment. However, for our purposes, the following observations are more relevant:

"23. The above discussed principles as regards the import and application of proviso, leaves us in no doubt to conclude that the proviso to subsection (3) of section 25 of the Ordinance, 1999 was consciously made part of it by the legislature to provide an exception about the application of section 25(3) in its generality to certain cases, as in the instant one and no redundancy had occurred in subsection (3)(ibid) when read its proviso..."

41.It may be seen from a reading of the portion reproduced above that the Supreme Court of Pakistan held that the insertion of a proviso cannot be tantamount to rendering the main enactment as redundant and it is merely an exception about application of a certain provision and its generality to certain cases.

42.Mr. Liaqat Ali Chaudhry, Advocate appearing on behalf of the respondents in some of the petitions also relied upon precedents of the superior courts. The precedents so cited by the learned counsel dealt with the concept of excessive delegation of legislative powers as also to a statutory functionary acting mala fide or in a particular unjust and oppressive manner. Further, the judgments so cited dwelled upon the concept of reasonable restrictions within the meaning of fundamental rights. It is not necessary to deal with these judgments separately as the general principles laid down in the said precedents are not in dispute.

43.Another concept which will be engaged in the present petitions will be the concept of unjust enrichment. This concept has found expression in our jurisprudence by the judgment of Supreme Court of Pakistan in M/s Pfizer Laboratories Ltd. v. Federation of Pakistan and others (PLD 1998 SC 64). This concept has been brought forth eruditely by Syed Mansoor Ali Shah, J. in Sui Northern Gas Pipelines v. Deputy Commissioner Inland Revenue and others (2014 PTD 1939) in the following words:

"This deprivation results in unjustly enriching and benefiting the department. Unjust W.P. No. 14832/2014 11 enrichment is retention of a benefit by a person that is unjust or inequitable. The Supreme Court of Canada has recently taken the opportunity of reviewing the law regarding unjust enrichment in Garland v. Consumers' Gas Co. wherein Iacobucci, J held: "As a general matter, the test for unjust enrichment is well established in Canada. The cause of action has three elements: (1) an enrichment of the defendant; (2) a corresponding deprivation of the plaintiff; and (3) an absence of juristic reason for the enrichment ... " Thus, for recovery to lie, something must have been given, whether goods, services or money. The thing which is given must have been received and retained by the defendant, and the retention must be without juristic justification. One of the more prominent statements of the principle of unjust enrichment includes the early and of trepeated dictum of Lord Mansfield in Moses v. Macferlan: "the gist of this kind of action is, that the defendant, upon the circumstances of the case, is obliged by the ties of natural justice and equity to refund the money. "Another is that of Lord Wright in Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd. "... any civilized system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is to prevent a man from retaining the money of or some benefit derived from another which it is against conscience that he should keep. "The American Restatement of the Law of Restitution: Quasi Contracts and Constructive Trusts, 1937, states the principle of unjust enrichment in the following simple terms: "A person who has been unjustly enriched at the expense of another is required to make restitution to the other." And, one of the leading Commonwealth texts on restitution elaborates on the notion as follows: "[The principle of unjust enrichment] presupposes three things. First, the defendant must have been enriched by the receipt of a benefit. Secondly, that benefit must have been gained at the plaintiff's expense. Thirdly, it would be unjust to allow the defendant to retain that benefit..." "Unjust enrichment occurs when a person retains money or benefits which in justice, equity and good conscience, belong to someone else...The doctrine of unjust enrichment, therefore, is that no person can be allowed to enrich inequitably at the expense of another. A right of recovery under the doctrine of "unjust enrichment" arises where retention of a benefit is considered contrary to justice or against equity. Reliance with advantage is also placed on Messrs Pfizer Laboratories Limited v. Federation of Pakistan and others (PLD 1998 SC 64). Unjust enrichment is, inter alia, anchored in our fundamental premabular constitutional value of economic justice. Our constitution abhors any form of economic exploitation..."

44.The rule against unjust enrichment was resorted to in MCB Bank Ltd. v. Deputy Commissioner Inland Revenue and others (2015 PTD 911). Applying the principle of unjust enrichment to the present case, it is evident that the Legislature by clause 72B clearly intended to give a benefit to the petitioners and other persons in a similar situation. By the insertion of conditions V and VIII in the impugned Notification, the FBR has, in fact, tried to unjustly enrich itself in clear violation of the mandate of clause 72B and its purpose.

45.Unjust enrichment gives rise to restitutionary remedies. In his excellent book, The Principles of the Law of Restitution, Virgo argues that restitutionary remedies are available not only to reverse unjust enrichment but also to vindicate property rights with which the defendant has interfered. In The Law of Restitution, Andrew Burrows stated that "there was an unjust factor of retention of the plaintiff's property without the owner's consent, and that this was the best explanation nor merely of the claimant getting back property which had always belonged to him but also of restitution following tracing into substitutes.' It was in the case of Lipkin Gorman v. Karpuale Ltd. [1991] 2 AC 548, that the House of Lords accepted a law of restitution based on unjust enrichment.

46.In any case where a claimant has paid tax which is not due, the restitutionary claim lies against the revenue authority which has received the payment, so that the ground of restitution would be that recognized by the House of Lords in Woolwich Equitable Building Society v. I.R.C [1993] A.C 70, namely ultra vires receipt.

47.In the present petitions, however, the ground of unjust enrichment has been raised in the general broad sense of the term without the context of restitution in mind. It is more in the nature of ultra vires receipt as held in Woolwich Equitable case. The petitioners claim to be aware of the ultra vires nature of the demand and do not wish to make the payment under a mistake of law to be restituted at a later stage.

48.In view of the above, these petitions are accepted. The conditions "V and VIII" in the impugned Notification are held ultra vires the powers of FBR and beyond its remit, and are thus declared without lawful authority and of no legal effect.

49. It is made clear that the Notification shall remain effective but as a consequence of the foregoing declaration, conditions "V and VIII" shall not be read as part of the impugned Notification.

(Annexure 'A')

LIST OF CASES

Sr. No.	Writ Petitions Nos.	Title
1	30841 of 2014	Siraj Fertilizer v. FBR
2	772 of 2015	M. Azam v. FOP
3	5182 of 2015	M/s Ata Mettals v. FOP
4	8450 of 2015	M/s Pak Pipe Industries v. FOP
5	8836 of 2015	Samad Pipe Industries v. FOP
6	8938 of 2015	Rafiq Pipe Mills v. FOP
7	9101 of 2015	Farooq Steel Industries v. FOP
8	10251 of 2015	M /s S.K. Pipe Factory v. FOP
9	10252 of 2015	M/s Inayat Pipe Industries v. FOP
10	10420 of 2015	M/s Master Pipe Industries v. FOP
11	10989 of 2015	M/s Ibrahim Nizami Steel Wire v. FOP
12	10991 of 2015	M/s Al-Majeed Ibrahim Steel v. FOP
13	11481 of 2015	M/s Modern Piple Mills v. FOP
14	11898 of 2015	M/s Hamza Industries v. FOP
15	11894 of 2015	M/s H H Industries v. FOP
16	12411 of 2015	M/s Tayyaba Industries v. FOP
17	12243 of 2015	M/s Ruby Steel Cor. V. FOP
18	12245 of 2015	M/s Sun Tube v. FOP
19	12244 of 2015	M/s Smart Steel v. FOP
20	12176 of 2015	S.S Oil Mills v. FOP
21	13534 of 2015	HI Techedible Oils v. FOP
22	13398 of 2015	M/s Kamran Steel v. FOP
23	12983 of 2015	Oil Trade v. FOP
24	12239 of 2015	M/s A & A Pipe Industries v. FOP
25	19128 of 2015	M/s Master Pipe Industries v. FOP
26	14385 of 2015	Steel Complex v. FOP
27	14671 of 2015	M/s Khalid Pipe Mills v. FOP
28	17197 of 2015	M/s Mughal Iron v. FOP
29	19425 of 2015	-do-
30	15661 of 2015	M/s Karachi Tube Mills v. FOP
31	15407 of 2015	M/s Bashir Pipe Industries v. FOP
32	16393 of 2015	M/s Empire Tube Mills v. FOP
33	16526 of 2015	Farooq Steel Industries v. FOP
34	21719 of 2015	M/s Ibrahim Fibers v. FOP
35	25807 of 2015	M/s Metaline Industries v. FOP
36	25830 of 2015	M/s Pyramid Gas v. FOP
37	30275 of 2015	Asian Food v. FOP
38	31935 of 2015	M/s H Hcold Rolling v. FOP
39	33534 of 2015	Olympia Synthetic v. FOP
40	33648 of 2015	M/s Premier Industrial v. FOP
41	35612 of 2015	Farooq Steel Industries v. FOP
42	36119 of 2015	Nishat (Pvt.) Ltd. v. FOP
43	36307 of 2015	M/s Bashir Pipe Industries v. FOP

SL/H-6/LPetitions allowed.